One of the main questions we receive in regards to VA loans is, “What is a VA mortgage loan entitlement?”
If you’re wondering this, don’t worry; you’re definitely not alone!
Rather than acting as a lending agent itself, the Veterans Administration simply guarantees the home loans of veterans. This means that if the borrower defaults on the mortgage, the lender has an insurance policy with the VA for the entitlement amount.
Because they are protected against losses, VA lenders can offer more favorable terms on VA loans. The VA is able to give a guaranty to applicants who fulfill the eligibility requirements, which include but are not limited to:
- Having a good credit score, typically above 620.
- Having enough income for monthly mortgage payments.
- Not having a bankruptcy or foreclosure within the past 24 months.
For the majority of veteran borrowers, the standard entitlement for a VA loan is $36,000 for a loan equal to or less than $144,000. However, if your loan amount is over $144,000, the Veterans Administration will offer a guaranty of up to 25% of your county limits.
County limits for VA loans vary greatly throughout different parts of the United States. You can determine what your limit is by looking at the list of specific VA county loan limits on va.gov.
It is important to note that the VA does not list every county. Counties that are not included in the official 2011 VA County Loan Limits website have a loan limit of $417,000.
After reading this you may be wondering to yourself, “Why does the Veterans Administration have different loan limits for different counties?” The long and short of it is that housing markets across the United States vary greatly.
For example, the average price of a house in California is close to double the average price for a house in Ohio! It would never work to have a set one-size-fits-all limit for all 50 states.
Keep in mind that while the VA does not set a cap for how much veterans can borrow, some VA mortgage lenders may not approve loans above $417,000. This is because lenders usually sell bundles of VA loans in secondary markets, where – you guessed it – the maximum loan limit can be $417,000.
It’s important to note that VA loan entitlements have also gradually risen over time. Because of this, many veterans who have previously taken out a VA loan might actually be qualified for more money today than they were originally.
If you have taken out a VA loan in the past, you can contact us to quickly determine whether or not you are indeed eligible for some portion of your VA loan entitlement now.
This all ties into the fact that veterans are allowed to take out more than a single VA loan as long as they are not concurrent, and that you can also refinance with a VA loan!
In other words, if you took out a VA loan on the house that you are currently living in, but have decided to sell it and move, you can take out another VA loan for the house that you want to buy.